Nearly a third of developers (31%) have been withholding capital in order to remain flexible in the face of economic uncertainty, according to recent research from Shawbrook. The same proportion also stated that they have withheld capital to cover any unforeseen costs.
Developers clearly are watching economic headwinds closely, with 36% saying they have closely monitored trends to ensure their projects meet current demand, and a third have focused their developments in areas that are seeing higher activity.
It’s also promising that 32% of developers surveyed have been able to take on new developments, and 31% have diversified their investments, giving an insight into the sector’s ability to adapt and alter their strategies to maintain progress and profit.
To mitigate uncertainty, 30% of developers stated that they have worked with a lender to secure additional funding. With the economy starting to improve, and the new Government placing an emphasis on housing targets, we may start to see developers deploy their capital more freely, driving more housebuilding across the UK.
Terry Woodley, MD of Development Finance at Shawbrook, commented: “Economic challenges and considerations such as rising costs have been key concerns for developers over the past 12 months. However, we have seen the agility of the sector in evidence, with many developers diversifying their strategies to mitigate any impact and navigate their businesses through a tricky period.
“As well as changing property types and making changes to materials, locations and other core elements of their plans, developers have shown an ability to monitor market demands and effectively tailor their projects to future proof their businesses.
“However, with the new Government putting housing high on the agenda, and house builder shares on the up since the general election, the outlook appears positive and developers should have more opportunities to unleash their capital. This means that over the coming months, we will see developers committing to more projects, which should in turn spark housebuilding activity. Though planning reforms will take time to materialise significant change, the plans and house building targets should provide the impetus needed to ramp up the housing output which the UK so desperately needs.”
